Businesses are birthed from great ideas. But how can you tell the difference between a great idea and a big stinker?
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Before you invest too much time and energy in your big idea, you need to know the characteristics of a concept that will probably never get off the ground. Here are some of the warning signs to look for . . .
No Industry Experience
The first warning sign of a bad business idea arises when you realize that you have absolutely no experience in the industry of the business you plan to start. Let's say you have an idea for a novelty restaurant even though you've never worked in a food service environment. What is the day-to-day activity of a restaurant really like? What monthly expenses are involved? Are customers willing to spend more for a novelty dining experience? Without industry experience, these questions (and a thousand more) are all unknown.
Did you come up with your big idea at a dinner party or did you invest months of effort scouring the business environment for gaps in the market? Before you quit your job and cash in your 401(k), you'll need to do hours and hours of mind-numbing research just to determine whether your idea even has the potential of becoming an actual business concept.
It's not uncommon for aspiring business owners to view their idea through rose-colored lenses. To accurately judge the feasibility of your big idea, you have to set your optimism aside and get realistic. You should be especially concerned if your idea relies heavily on factors outside of your control. For example, if you are counting on a $50,000 government grant to get the business off the ground, you probably need to go back to the drawing board.
Big ideas generate the potential for big profit. However, big ideas are also less easy to execute, particularly if you are starting from scratch. If right now you are the only person involved in the project and making your idea a reality involves coordinating the efforts of a sales team, a marketing department, and a production staff, then the idea is simply too big to execute - at least now. A better approach might be to scale back your idea to something that is achievable now with the goal of growing into the big idea over time.
Is anyone else doing anything close to your big idea? If not, did you ever wonder why they aren't? It's possible that your idea is completely viable and you are simply the first person to ever think about turning it into a money-making business venture. However, it's also possible that no one else is doing your idea because they know something that you don't. If no one else is doing it, take a closer look for obstacles that might be looming below the surface.
Your motivation for wanting to turn your idea into a functioning business is almost as important as the business idea itself. If you are looking for the next great business idea as a way to earn cash for next month's rent, you are wasting your time. Successful ideas take months or even years to execute. But if your idea was born out of a genuine desire to start a business that fills a gap in the marketplace, who knows - you might be the next great American success story.